FYI, We Don’t Write Here Anymore
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Mortgage Commentary 10/6/2008:
- Monday’s bond market has opened up sharply after this morning’s stock markets are selling off again. The Dow is currently down 450 points while the Nasdaq has 100 points. The bond market is currently up 29/32, which will likely improve this morning’s mortgage rates from Friday approximately .375 of a discount point. Additional improvements may be likely today.
This morning’s stock losses has pushed the Dow below the 10,000 mark for the first time since late October 2004. I appears that this trend may continue, at least for the short-term and should benefit bonds as investors seek safe-haven.
This week brings us only one monthly economic report for the markets to digest and it is not considered to be of high importance. This means that the week will be left mostly up to the stock markets and other influences since there is a lack of factual data for bonds to trade on. In addition to the one report, we will also get the minutes from the last FOMC meeting that can also cause movement in rates if it reveals any surprises.
The first news of the week comes tomorrow afternoon when the Fed will release the minutes to the last FOMC meeting. These may be a major mover of the markets or could be a non-factor, depending on what they say. The key will be concerns over inflation and the Fed’s next move. If the Fed members were concerned about inflationary pressures, we may see the bond market move lower and mortgage rates higher tomorrow afternoon. However, if they indicate that inflation is easing and that a rate increase is not likely in the coming months, we should see the bond market rise and mortgage rates drop during afternoon trading.
Mortgage Commentary- AFTERNOON UPDATE 9/16/2008:
T
oday’s FOMC meeting has adjourned with an announcement of no change to key short-term interest rates. The post-meeting statement indicated that the Fed felt key rates were low enough to spur economic activity. The stock markets initially reacted negatively to the news since traders were expecting a rate cut, but then staged a rally that pushed the Dow up 141 points and the Nasdaq up 28 points.
The bond market did not fair so well. As expected, as soon as stocks started to rise, bonds suffered. The same funds that were moved into bonds and drove prices higher yesterday, now were hurting bonds as they were shifted back into stocks. The result was the bond market closing down 26/32 and a sizable increase to mortgage rates. I suspect that there is more room for bonds to fall if stocks continue to move higher.
Today’s only relevant economic data was August’s Consumer Price Index (CPI). It showed a decline in the overall reading of 0.1% and an increase of 0.2% in the core data reading. Both of these readings matched forecasts, therefore, they had little impact on the bond market or mortgage rates.
August’s Housing Starts report is the only relevant data being posted tomorrow morning. This report will probably not have much of an impact on the bond market or mortgage rates. It gives us a measurement of housing sector strength and mortgage credit demand, but is usually considered to be of low importance to the financial markets. Tomorrow’s report is expected to show a drop in new housing starts from July’s levels.
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It Is Time To Write Here Again
Yes, I spent my time on other blogs, shame on me. I think my absence here caused the mortgage crises. As I crank up my transparent mortgage engine several things are going through my mind. Pop in once in a while - it might be fun.
How is this for starters… Would you like to win a home in Washington State? In Snoqualmie Pass no less. We just spent the weekend there. It was fantastic. Some use their mountain home full time, some as a second home. To learn more about Snoqualmie Pass click here and to learn about the book, click here, to buy a book, click here.
What a better way to end a personal mortgage crises than to have no mortgage - or no rent.
You Haven’t Been Thinking About Mortgage Rates Have You?
Here are a couple of articles from Las Vegas Undressed author Mark Clawson to consider.
What does it mean when the Fed cuts rates?
I mentioned that weakness in the stock market can help mortgage interest rates
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Why Should You Do Business With Our Lenders?
We are launching our Undressed Network. Each neighborhood, community, or town website will have local lenders advertising on the site. They will be known to the local agent.
There are 10 good reasons you should do business with the lenders advertised in the Undressed Network:
1- They have experience working with real estate agents.
2- Real Estate agents won’t work with lenders that charge their clients high fees.
3- Real Estate agents won’t work with lenders that don’t deliver as promised.
4- Real Estate agents won’t work with lenders that get clients upset.
5- Real Estate agents won’t work with lenders that don’t close on time.
6- Real Estate agents won’t work with lenders honor rate locks.
7- Real Estate agents won’t work with lenders that aren’t program versatile.
8- Real Estate agents won’t work with lenders that have experience and are skilled in their craft.
9-Real Estate agents won’t work with great processing assistance.
10-Real Estate agents won’t work with lenders that don’t keep their word.
That is, if they had their choices.
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For The Banks: Lots Of Fraud Prevention Tools
Underwriters have great tools available these days. I just spoke with one of our favorite mortgage bank underwriters on the subject. They can order information on you, your property, its renter, seller, etc. All in all 145 alerts can be provided. These may raise red flags on your income, employement, legal residency, likelyhood of occupying, if you are a flipper, illegal alien, on the federal terrorists watchlist, really self employed to name a few.
In last wednesdays article “Troubled” Corey Lerner wrote this comment:
Name: Cory Lerner | E-mail: cory@profinancenow.com | URI: http://www.theequityladies.blogspot.com | IP: 66.236.122.94
Hi -as a mortgage consultant, I am constantly hearing stories of what a poor job one of our ilk did - lying about a rate, not disclosing this or that. It really bugs me but there is nothing I can do about others in our business.
However, I can say that I have not yet had the experience you have had with outright lying on the part of the borrower. Your reputation, my reputation are really hit hard by this thing. Besides making it clear in the first interview about how I do business and that fraud will not be tolerated, I’m curious to know how others handle that issue. Cory Lerner
I think the answer to Cory’s question is at the bank level. With the tools available they use the red flags to require documentation that will help clarify against fraud.
The amazing thing is, that if one gets away with it at the loan approval level they have to live with the pressure that they have committed a crime and are on their way to free room and board and special bracelets.
5 Things To Do Before You Dive Into Your First Home
Note: This guy is already in pretty deep. How about you?
1- Make sure your credit score will allow you to secure a loan with market rates.
2- Make sure the lender you choose has a good reputation with the agent you will use. (No exceptions here.)
3- Use an agent that knows the local market you will be purchasing in.
4- Do a personal evaluation about your financial stability. Will you be in the home for a few years? (prices may stay flat for a while) Can you really afford the new payment? Do you have some cash reserves? (how many months could you survive with a job loss? Could you be better off by first upgrading your employment first? Do you have high interest rate debt that could be paid off first? Will the new purchase allow you to go forward spending less than you earn?
5- And before you even dip your toes in the water spend serious time learning from experienced people on line. Spend as much time learning about mortgages as you do searching for that home on line.
PS: The last time I put up a list of 5, Teresa Boardman said you always have 10 in lists. Tell Teresa, there are 10 in this list of 5. Lar
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Coming Next Week - The New Focus Of Mortgages Undressed.com
We have been complemented for our content. It will stay.
We have been advised to write the mortgage content on RealEstateUndressed.com. After careful consideration we are doing that.
We started this blog to offer consumer transparancy on mortgages. We knew the passion for searching for homes was number one, yet felt the need for mortgage transparancy was equally important.
At least on Mortgage Monday you will find the same content driven focus. Transparancy still is our goal.
Next we will take another step on this blog to make it easier for you to have a great mortgage experience.
The ghost may appear here and there, it has offered to leave us alone. I think this ghosts name is Casper, it is sort of friendly. Haunt us any time ghosty.
However, a simple new important purpose will arrive on this blog.
Thanks for your visits. Larry Cragun
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